The Coinbase Trap_ Why Short-Term Trades are DANGEROUS Right Now!

Summary

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Podcast Summary: Earn Your Leisure

Episode: “The Coinbase Trap: Why Short-Term Trades are DANGEROUS Right Now!”
Date: February 21, 2026
Hosts: Rashad Bilal & Troy Millings (plus guest analysts)
Production: iHeartPodcasts

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Episode Overview

This episode takes a deep dive into the recent volatility in Coinbase shares, using its latest earnings event as a high-profile case study to highlight the dangers of short-term trading—specifically options strategies like puts. The hosts break down how technical, fundamental, and behavioral factors can undermine the best-laid trade plans, especially in turbulent markets. Listeners are guided through both the logic behind a recent options play and the emotional roller coaster that often follows.

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Key Discussion Points & Insights

1. The Coinbase Earnings Play – Setup & Logic

[01:20 – 03:55]

• Short-Term Trade Risks: Analyst 1 recounts getting burned on short-term trades and flags Coinbase as a current example.

  “Short term trades … factors could work against you that you don’t have control over … you gotta be extremely careful.” – Analyst 1 (01:20)

• Sector Context: Analyst 2 details sector-wide poor performance:
  • Bitcoin and overall crypto prices have been in a downward trend;
  • Robinhood’s weak crypto earnings foreshadowed the trend;
  • About 34% of Coinbase’s crypto revenue is tied directly to Bitcoin (03:10);
  • All data suggested Coinbase would miss on earnings.
• The Trade Decision:
  • Host describes buying a “put” (betting on a fall) just before earnings, citing multiple negative catalysts.
  • After-hours trading briefly confirms the expected dip, leading to initial excitement.

2. The Trap in Practice – How the Market Moved

[03:55 – 05:28]

• Surprise Rally:
  • Despite poor results, after-hours trading sent Coinbase up sharply, baffling the analysts.

  “I watched it go to 148... after hours, we can’t control it... In the morning, it’s at 154. Coinbase ends up closing at 164… We lose on the put.” – Analyst 2 (03:59–04:30)

• Market Mechanics:
  • Speculation that institutional buyers—not retail traders—propped up Coinbase on weak results.
  • Analyst 2 emphasizes the lesson: short-sellers can be “squeezed” out when unexpected rallies force them to cover losing trades.

3. Short-Term Options: Why They’re So Risky

[05:22 – 06:20]

• Short vs. Long-Term Holds:
  • Analyst 3 asks what timeframe offers better odds for options trades.
  • Analyst 2 recommends longer durations (“a month, month and a half at the max”; 06:20) and reminds they've rarely used puts—highlighting the rarity and riskiness of such strategies.

4. Earnings Surprises and Stock Behavior

[06:20 – 07:49]

• Catalyst Disappointments:
  • Momentum sometimes trumps fundamentals, with bad news not always leading to price drops.

  “Sometimes earnings could be terrible and you'll see a crazy bounce up $20, and earnings can be great and a stock will be flat or actually pull back.” – Analyst 2 (06:20)

• Risk & Research:
  • Analyst 3 recommends back-testing, using tools like Claude, and paying attention to “average true range” before setting stop losses to avoid whipsaws.
  • The panel agrees that in this market conditions, traders should allow enough time and not over-tighten stop losses.

5. Analyst Ratings & Market Reactions

[07:49 – 08:19]

• Double Downgrade Ignored:
  • Coinbase was “double downgraded” to “sell” by institutional analysts coinciding with earnings, yet the stock rallied, further supporting the idea that external factors can overrule fundamental analysis.

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Notable Quotes & Memorable Moments

• On the Paradox of Earnings Reactions:

  “Missed on earnings, missed on revenue, future guidance is weak ... everything you could think of is in it ... This should be a pullback.” – Analyst 2 (03:55)

• On The Powerlessness of Traders Against Market Forces:

  “After hours, we can't control it. ... You can't do anything again till 9:30 when the market opens.” – Analyst 2 (03:59)

• Institutional vs. Retail:

  “It wasn't retail that led that charge. But kudos to the institutional buyers. I see you.” – Analyst 3 (05:22)

• On Embracing Longer Timeframes:

  “If we do a put, it's usually going to be a week, two weeks, three weeks out ... I think a month, month and a half at the max.” – Analyst 2 (06:20)

• On Market Whipsaws:

  "Futures market may drop and then you'll see a dead cat bounce and hit your stop and then go back to that direction ... Be mindful, especially in this market … your stop loss is not too tight." – Analyst 3 (07:22)

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Timestamps for Important Segments

• [01:20]: Start of Coinbase trade discussion – warning about short-term trades
• [03:10]: Tying Coinbase’s revenue to Bitcoin and market sector analysis
• [04:00 – 04:30]: Emotional roller-coaster on earnings day – put option goes bad
• [05:22]: Discussion of short seller squeeze and institutional market action
• [06:08]: Advice on options timeframes; longer puts are safer
• [06:20]: Real-life example: good/bad earnings don’t always match price moves
• [07:22]: Technical tips for futures/stop losses
• [07:49]: Coinbase’s double downgrade discussed
• [08:19]: Transition to next episode promo – end of main content

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Key Takeaways

• Short-term options trading around earnings is especially risky: Even “perfect” setups can be undermined by surprise market behavior.
• Market reactions often defy logic: Bad results can trigger rallies, and all the expected catalysts may not materialize.
• Liquidity and institutional activity dominate: Sometimes big players push stocks in opposite directions to fundamentals.
• Use longer timeframes, proper research, and test strategies: Avoid tight stop-losses and too-short options. Do your homework and backtest ranges.

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This episode underscores the hazardous, unpredictable nature of short-term trading and delivers a cautionary tale for those tempted by seemingly obvious bets against companies like Coinbase. Expert analysis is balanced with personal trade lessons and practical risk management tips, all in Earn Your Leisure’s signature conversational tone.

Transcript

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[Financial Analyst 1]

Yeah, I talk about Coinbase and what that represents as far as short term trades, because short term trades, I got burnt a few times with short term trades. And the thing with short term trades is that sometimes factors could work against you that you don't have control over and you got to be extremely careful. And that's a good example, I think, this Coinbase situation. So you want to talk about that?

[Financial Analyst 2]

Yeah, man. You talk about all of the signs pointing to a negative earnings report. Right? Like if we look at the space that Coinbase is in, obviously cryptocurrency is huge for their bottom line. We looked at how bitcoins predominantly has performed over the past six months or even in the last quarter. We talk about the downtrend of bitcoin and how long that usually lasts. Usually down. These downward cycle cycles last anywhere between 150 to 360 days. On the shortest term, it's been like 141. We are currently, that was Thursday. So we're currently in like day one, 136 or something like that. So we're, we're still in that, that short term phase, you look at that, you look how Robin Hood reported and they pulled back on their earnings obviously because of the downturn in their revenue from, from cryptocurrency. Bitcoin being a leader, you see how much the revenue comes from bitcoin. I think it was like at 20%. And so you start asking yourself, at least I was asking myself like, okay, well, if we see all those metrics on a downward trend, then Coinbase obviously must also be in this because it's in the same sector. You go a little deeper into the research, you find that, you know, 50, 50 of Coinbase's revenue comes from cryptocurrency. It doesn't say specifically, there's no details on it, but the estimated what people perceive.

[Financial Analyst 3]

You can see the correlation.

[Financial Analyst 2]

The correlation, right? I think there's that 34 of that cryptocurrency revenue comes with bitcoin alone. Again, if it's in the downward cycle, you can see how revenue is going to miss. And so I said, okay, well, I hate puts. Number one, I hate puts. Hate them, don't do them. Rarely. I said, this might be an opportunity here. Let's just, let's put a, put on this. And it was like right at the money and at like 4 o' clock this happens and oh, we're looking great. All day. We're looking great. And then like at 4 o' clock we're looking even better. It gets down to 1:34. I'm like, perfect, we've dropped $14. And I'm watching this thing and I'm watching it, and then I watch it go up. I'm like, hold on, let me read the report. Missed on earnings, missed on revenue. Future guidance is weak.

[Financial Analyst 3]

Yeah, future guidance is terrible. Brian Armstrong. I said a fucking word.

[Financial Analyst 2]

Everything you could think of is in it. In the favor of. This should be a pullback, right? I watched it go to 148. I said, oh, damn. After hours, we can't control it. I know there's some platforms that allow you to trade equities 24 7, but in the options, you can't do anything. Right after 4:00, you're done. You can't do anything again till 9:30 when the market opens. Watching it, watching it for an hour, it goes from up to 154. I'm like, yo, what this is? Then I start thinking like, the market will always punish you for doing short term. This is why I hate doing puts. Yeah. Wake up in the morning, it's at 1:54. I said, oh my gosh, this is ridiculous. Coinbase ends up closing at 164 like the put was at 148. So obviously we lose on the put in. Just for full transparency, when we do puts, we're not looking at them as leaps. Right. That's too much time. And so if we do a put, it's usually going to be a week, two weeks, three weeks out, so we can get to that price. It shot up to 164 on Friday. Obviously the market wasn't open today. It'll probably stay in that range. And so I'm trying to figure out why would, who's holding this company up. And the only thing I could find, and hopefully maybe somebody can add some, some, some texture around this conversation is they said that it had hit a bottom and retail investors are saying let's buy the dip. And I said, nah man, no way, no way, no way.

[Financial Analyst 3]

And so it wasn't retail to let that charge. But kudos to the institutional buyers. I see you.

[Financial Analyst 2]

And sometimes we talk about being a short seller in that situation, the short seller got squeezed. That would be a short seller getting squee. Right. Like when everything is pointing to the downward trend, you're saying, yes, here comes downward trend. Okay, here comes market Squeeze you out your position, take the liquidity, it stays afloat. Now how long will it stay at 160? Let's say it stays up there for four weeks and drops back down to 130. At some point, all those people who are inside of those, those short term calls or, or puts all get squeezed. Liquidity is taken by the brokerage and we get stuck looking like, oh my gosh, why do we do this in the first place? So just be careful when you're doing puts. This is a valuable lesson that can

[Financial Analyst 3]

be learned opposed to a two week time frame. What time frame would be beneficial for them to hold the put where it could pay out in their favorite like going forward if they was in the same scenario. But you got a month or how long? Much longer.

[Financial Analyst 2]

I think a month. I think it's months of 5 month and a half at the, at the max. I don't, I've done probably like five puts and like maybe at the most, I could probably like maybe 10 at the most in like seven years. Right. This is something I rarely do. But the opportunity was point pointing in that direction. It didn't work in that favor. And so we'll, we'll see what happens with it. But again, sometimes the momentum, sometimes earnings could Be terrible. And you can see we'll see a crazy bounce up $20 and earnings can be great and a stock will be flat or actually pull back. Right. We just saw that happen with, with Google. Right. We're still seeing it happen with Google and we'll talk about them a little bit later. But like these are the things and that's why when we say like hey, catalyst events are important, they're good to have as information. They all always aren't created the same. And momentum may not move in your favor just because something was great, because there's information that we don't know. But shout out to Brian Armstrong and the whole family and the same thing

[Financial Analyst 3]

can happen to futures. Like the futures market may drop and then you'll see a dead cat bounce and hit your stop and then go back to that direction. That's why you have to go back and test. It's a great thing to do in Claude to find out what the average true range is to see where to put your stops so they won't get whipped out. So yeah, be mindful, especially in this market, regardless of the direction that you're going, that you have enough time in your favor and your stop loss is not too tight for the asset that you're trading.

[Financial Analyst 2]

Yeah, and it got double downgraded. Think about that. Right? So when we talk about grading, and that's based on how analysts from large institutional firms feel about a company, there's usually like outperform, perform, hold, sell strong, sell. It got double downgraded to sell like on the day of its earnings. So I mean if you look at the report, I mean everything pretty much was negative and we saw a bounce. Go figure.

[Financial Analyst 1]

Yeah, go figure. Okay, so blackout at 09:00 Eastern Standard Time on Wednesday. Make sure you tap in and then earn your leisure. At 12:00pm Eastern Standard Time on Thursday we got Mark Barnes. So Mark Barnes, if you ever been in D.C. speaking of D.C. park on 14th, you know, he's the one that actually had Club Dream, Club Love. Legendary by all accounts the number one club owner in America when it comes to his 30 year run. If you ever been to DC, I'm pretty sure you know about Park Dream and Love and if you don't, then you out the loop. Yeah, but we interviewed him at, at the park and yeah, he had, he has some interesting things. Interesting things for sure, man. Interesting thing. A lot of gems though. A lot of gyms, but very entertaining, I'll say that much.

[Financial Analyst 2]

It, it, it gives very. I'm free when you're a pro, you

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